First Interstate BancSystem’s second quarter results were met with a negative market reaction as the company missed Wall Street’s revenue expectations. Management attributed the performance to intentional balance sheet reductions, including the outsourcing of its consumer credit card product and the transfer of loans connected to branch sales in Arizona and Kansas. CEO James Reuter described these moves as part of a broader effort to refocus on core markets and optimize the company’s capital position. While classified loans declined, nonperforming assets remained stable, and criticized loans rose due to slower lease-up in certain multifamily projects, which Reuter called a “byproduct of market dynamics, not a reflection of weakened collateral.”
Is now the time to buy FIBK? Find out in our full research report (it’s free).
First Interstate BancSystem (FIBK) Q2 CY2025 Highlights:
- Revenue: $248.3 million vs analyst estimates of $252.7 million (1.6% year-on-year growth, 1.8% miss)
- Adjusted EPS: $0.69 vs analyst estimates of $0.58 (19.9% beat)
- Adjusted Operating Income: $97.9 million vs analyst estimates of $92.47 million (39.4% margin, 5.9% beat)
- Market Capitalization: $3.15 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From First Interstate BancSystem’s Q2 Earnings Call
- Jeffrey Allen Rulis (D.A. Davidson) asked about the timing for loan portfolio stabilization. CFO David Della Camera indicated loans are likely to bottom in the third quarter, with prospects for stabilization or growth by the end of the year.
- Robert Andrew Terrell (Stephens Inc.) questioned the drivers behind the increase in criticized loans. CEO James Reuter attributed this to delayed lease-up in multifamily projects, asserting confidence in collateral and guarantor support.
- Kelly Ann Motta (KBW) pressed for detail on expense reinvestment and talent retention. Reuter emphasized that expense savings will not come at the cost of growth-oriented hiring, stating the bank has “the right people on the team.”
- Jared David Wesley Shaw (Barclays) inquired about the overall magnitude of loan runoff and whether the valuation allowance was credit- or rate-driven. Della Camera confirmed the allowance was due to interest rate changes, not credit quality.
- Timur Felixovich Braziler (Wells Fargo) asked about capital deployment priorities and the effect of loan repricing on future balance sheet composition. Reuter said share buybacks and balance sheet restructuring are under consideration, but organic growth remains the preferred use of capital.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will focus on (1) stabilization and potential growth in loan balances, especially as intentional runoff subsides; (2) further evidence of margin expansion from repricing assets and portfolio mix shifts; and (3) the pace and effectiveness of expense management, including reinvestment in talent and technology. Developments in criticized asset levels and any capital deployment actions, such as share buybacks or further restructuring, will also be closely watched.
First Interstate BancSystem currently trades at $30.59, up from $29.38 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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